Renault "Not Dying, Unlike Some Others On The Ward"
If you look at half year sales in Europe, then you see Renault as the worst performer of the volume makers. With EU sales down 17.09 percent, the Renault Group took a bigger hit than European patients Opel (- 15 percent) and PSA (-13.9 percent). Even troubled Fiat was doing better than Renault, by a hair (-17.08 percent for Fiat.) Whereas the percentages carry the smell of death, Renault’s half year results smell downright rosy.
The Renault Group reported a half year group profit of €1.02 billion ($1.26 b) before tax, and €786 million after tax. While this is nowhere near the X-rated profits of Volkswagen, or those of Daimler, a billion euro is a billion euro, and it is a miracle when your home market collapses.
Why the difference? Renault appears the best managed carmaker in trouble. Sure, most of the profit (€630 million) comes from Renault’s shares in other companies, notably Nissan. As Volkswagen and Daimler will confirm, global diversification is a good hedge against regional calamities. Sure, a big chunk of the money (€395 million) comes from sales financing. A well run bank that does not dabble in mortgages or currency gambles is beneficial to a carmaker’s bottom line. Still, Renault has eked out €87 million from making and selling cars, which is, it bears repeating, a miracle.
Astounded analysts expected Renault’s auto manufacturing business to report a loss. “The patient is not well, but not dying either, unlike some others on the ward,” Bernstein analyst Max Warburton told Reuters.
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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BMW and Mercedes have the benefit of gravy train badges, which keep them profitable, but Renault-Nissan still being profitable despite Renault's biggest market taking a gigantic hit says a lot about their management. Market fluctuations shouldn't necessitate government assistance, it should force companies to improve their business practices. Or go out of business, whichever.
It's not a bad performance from a company from Europe, often perceived to be a bunch of socialist, union hugging liberals. I have always believed that a well run business can make profit in just about any environment. It takes a 3rd world despot dictator (like Bob Mugabe... Oh! No, he was elected in a free and fair election) to bring a good business to it's knees and France is far from that. Also, that is a very good point about the well run bank... very good.
I'm not sure just how "Euro" Renault is anymore. That said, the Board must think Ghosn walks on water. Between him and Mulally it must gall the GM Board of Bystanders to have to haved settled for Akerson.